Generations after people deserted cities for the suburbs, young millennial-generation adults and older baby-boomer adults are moving back downtown.
Retailers aren’t far behind, and new, seemingly instant neighborhoods — complete with housing, retail, offices and other forms of real estate — are springing up in redevelopment areas of cities across the country.
"You always want to chase population growth," said Robert Volosin, a partner in Mahwah, N.J.-based Supermarket Consulting Group. "Now growth has shifted back into urban neighborhoods, and that is where retailers are going."
Going to town in Durham
Jacksonville, Fla.-based Regency Centers Corp., in partnership with Raleigh, N.C.-based Chartwell Property Group, is currently developing the 89,901-sq.-ft. Shops at Erwin Mill, which is anchored by Harris Teeter.
Located at Ninth Street and Hillsborough Road in Durham, N.C., the Shops are the retail component of a mixed-use development spanning two city blocks near Duke University.
The entire area is roaring with construction. The retail development at Erwin Mill includes components running from Hillsborough around the corner onto Ninth Street. The 53,000-sq.-ft. Harris Teeter is going up on Hillsborough, a cluster of shops is rising at the corner, and several streetfronts have appeared on Ninth.
Chartwell is also renovating the four-story Erwin Mill building, a historic textile mill, which will include apartments and offices. Two multifamily buildings are underway, as is a 125-room Hilton Garden Inn, and a 26-story high-rise has been completed.
"The $100-million multifamily, office, hospitality and retail development testifies to the interest in downtown living today," said Chris Widmayer, VP investments with Regency Centers. "We’ve seen this kind of interest in densely co-located retail, residential and office in a lot of properties. It is a trend that we’re seeing everywhere."
While the project is still under construction, a number of retailers have signed on. Regency is combining national, regional and local names to play to the market.
Now the suburbs want in on the urban trend
Several years ago, Fairfax County, Va., released a zoning overlay of a 27-acre site in Merrifield, Va. The site included an old movie theater and auto repair shop. The overlay caught the attention of EDENS, the Washington, D.C.-based community-oriented retail developer.
"We saw tremendous possibilities," said Steve Boyle, managing director, EDENS. "Fairfax is one of the wealthiest counties in the country, and the site was adjacent to a 100,000 car-per-day intersection near the Washington Beltway and Tysons Corner, which has 27 million sq. ft. of office space."
The overlay aimed to test a solution to a big problem. Every day, the population of Tysons Corner exploded from 19,000 to 100,000 as commuters drove to work, clogging the roads all day long.
Fairfax County’s solution: urbanize Tysons Corner with retail and, crucially, affordable residential to complement the offices. If more people lived in Tysons Corner and walked or took transit to work, traffic congestion would abate.
The overlay site in Merrifield would test the concept.
The county plan envisioned an urban landscape with vertical integration, parking decks, upper-floor retail, office, residential and a pedestrian-friendly environment.
"We planned a curated mix of interesting retail — locals, regionals and nationals — and architecture that created an urban neighborhood," continued Boyle.
EDENS brought partners into the project. Target would participate in the retail development. LodgeWorks Partners would lead the hospitality effort. Avalon Bay and Mill Creek would develop apartments, and EYA would build townhomes.
The partners wove together a community and named it Mosaic. With more than 1.9 million sq. ft., Mosaic is a LEED Silver certified urban neighborhood.
It has 500,000 sq. ft. of national, regional and local retail and restaurants. Angelika Film Center & Café, two parks and additional open space for neighborhood festivals, performances and gatherings add entertainment value.
Residential includes 1,000 units, 112 LEED-certified townhomes and a 148-room boutique hotel. The office side features 73,000 sq. ft. of Class-A office space and 4,000 parking spaces.
Voila: instant neighborhood.
WOODBURY TOWN CENTER
Location: Irvine, Calif. (SR 133 —the Laguna Freeway and the I-5 Santa AnaFreeway)
Size: 462,000 sq. ft.
Developer: Irvine Co. Retail Properties
Grocery anchors: Ralphs Fresh Fare, Trader Joe’s
Key tenants: Home Depot, LA Fitness, Walgreens, Staples
Status: Open and operating since 2007
Anchored by a 55,000-sq.-ft. Ralphs Fresh Fare and a 12,000-sq.-ft. Trader Joe’s, the center’s dual grocery anchors provide diverse products that cater to a broad base of consumer demand.
Woodbury is located within the award-winning master-planned community, The Villages of Irvine, encompassing six established residential communities. Several thousand more surrounding homes and apartments are now in development.
A variety of food uses and dining options include The Counter, Panera Bread, a new Chipotle Mexican Grill and Garbanzo Mediterranean Grill. Casey’s Cupcakes opened to rave reviews and offers a party room for special events.
Great Foundations Montessori school and day care is an added daytime traffic generator. With a trade area rich in families, Montessori had an enrollment waiting list soon after opening.
CRYSTAL TOWN CENTER
Location: Crystal, Minn. (Bass Lake Road and West Broadway)
Size: 55, 532 sq. ft.
Developer: Paster Enterprises
Grocery anchor: Aldi Food Market
Key tenants: Broadway Pizza, Chipotle, Liquor Barrel, Half Priced Books
Status: Completed in 2011
The shopping center was designed in 1997 to include an anchoring Office Depot. After chain consolidation prompted the store’s closure, Aldi Food Market became the perfect replacement — a tenant that would add to the vibrancy and traffic of the center, meet community demands and mesh with the existing tenant mix.
The challenge was to integrate the prototypical Aldi storefront and floor plan into the original design of the center, further complicated by the need for the Aldi cart corral enclosure and storefront canopy. The storefront roadway was narrowed in order to move the sidewalk out from the building, allowing for the cart corral enclosure to be placed parallel to the building.
The store entrance was relocated from the center of the space to the right side to accommodate the interior layout. Matching the original masonry and EIFS cornice treatments integrated the new construction with the original building materials.
Location: Bonita, Calif. (San Diego County)
Size: 98,854 sq. ft.
Owner: Donahue Schriber
Grocery anchor: Vons
Key tenants: Rite Aid, McDonald’s, Bank of America
Status: Originally built in 1978 and purchased by Donahue Schriber in July 2012, Bonita Centre has begun a $5 million center-wide renovation that will conclude on Nov. 22, 2013.
Bonita Centre is a well-established, high-performing Vons grocery-anchored center located at the intersection of Otay Lakes Road and Bonita Road in San Diego County. Daily traffic counts exceed 31,500 cars. A complementary mix of pad and shop tenants, such as Rite Aid, McDonald’s, Subway, Baskin-Robbins, Supercuts and Bank of America, make the center a natural destination for consumers’ daily needs.
In July, the center began a $5 million renovation, which includes new storefronts, landscaping, lighting and an updated signage program. The renovation will be completed prior to the holiday season and will maintain Bonita Centre’s position as the dominant grocery/drug anchored center of choice in the local trade area.
Location: Spring, Texas (Houston area)
Size: 148,963 sq. ft.
Owner: Acquired by Phillips Edison-ARC Shopping Center REIT in March 2013
Grocery anchor: H-E-B
Key tenants: Starbucks, Hallmark, Jimmy John’s, The UPS Store, Little Caesars, Weight Watchers, TGF Hair Salon
Status: Open and operating
Kleinwood Center in Spring, Texas, a suburb of Houston, is the first H-E-B anchored center in the Phillips Edison portfolio. Acquired by Phillips Edison-ARC Shopping Center REIT in March 2013, the center features a solid mix of retailers, restaurants and services.
Its three-mile primary trade area in Houston’s northwest suburbs is home to more than 86,200 residents with an average household income over $117,000 per year.
With the Houston market’s No. 2 grocery chain and a strong lineup of national tenants, Kleinwood Center is an excellent example of the type of property Phillips Edison-ARC seeks to acquire.
Location: Goldsboro, N.C. Size: 121,177 sq. ft.
Developers: Casto and 1st Carolina Properties
Grocery anchor: Harris Teeter
Key tenants: Office Depot, Subway, T-Mobile, Starbucks
Status: Completed and opened, summer 2013
Memorial Commons is a new neighborhood center ideally located at the gateway to Wayne Memorial Hospital, Wayne County Community College and the highest concentration of high-end housing in Goldsboro.
Anchored by Office Depot and a new 53,232-sq.-ft. Harris Teeter, Memorial Commons offers easy access, contemporary architecture, maximum signage, numerous amenities and convenient parking.
CROSSROADS AT SOMERSET
Location: Somerset, N.J. (Elizabeth Avenue [County Road 621] and Old New Brunswick Road, Franklin Township)
Size: 120,000 sq. ft.
Developer: Crossroads Cos.
Grocery anchor: ShopRite
Key tenants: Wells Fargo Bank, Go Wireless, Hair Cuttery, La Vida Salon, Frank’s Pizza, Let’s Yo, My Tokyo Restaurant, Robert Wood Johnson Hospital
Status: Three of four buildings are complete, including a 73,000-sq.-ft. ShopRite, 4,200-sq.-ft. freestanding Wells Fargo Bank and 17,000 sq. ft. of retail stores. Construction will commence on the remaining 25,700-sq.-ft. building in fall 2013.
The elegant design and anchor-tenant ShopRite attract more than 25,000 customers a week to Crossroads at Somerset. The location boasts excellent demographics. Within the three-mile radius, the population of 51,840 earns an average household income of $80,000. A population of 152,723 earns an average household income of $82,000 within the five-mile radius. There are 31,000 employed people within a three-mile radius, and 83,000 within a five-mile circle.
PREIT: Matching Mall And Grocer
Turns out, malls and grocers were made for each other.
A few years ago, Philadelphia-based Pennsylvania Real Estate Investment Trust (PREIT) renovated Plymouth Meeting Mall in Philadelphia’s northwestern suburbs.
The renovation replaced an old Ikea on the site with a lifestyle component called Plymouth Meeting Mall’s Plaza Shops, which leads customers to the mall entrance.
PREIT brought in a 65,000-sq.-ft. Whole Foods Market as the anchor.
“We like Whole Foods’ customers,” explained Joseph F. Coradino, PREIT’s CEO. “They have disposable income; they are well educated, edgy and fit. They also shop Whole Foods at least twice a week. We thought their shopping patterns might draw more customers to other stores."
It did. “Whole Foods has influenced a number of stores positively, including a Charming Charlie, Loft, Olly Shoes, Massage Envy and others.”
Proof? Mall sales rose to $350 per square foot from $250.
What challenges face a mall grocer? “Parking,” said Coradino.
“Grocers want close-in parking for customers. For Whole Foods, we added 300 parking spaces under the store to the surface parking. A cart escalator helps them move their groceries down.”
The idea might be catching on. Coradino is considering it for other malls, and Whole Foods is taking space at the Colonie Center mall in Albany, N.Y.